ARE YOU INSURED?
Does your medical insurance assure you of quality care when you need it?
Social media platforms are full of posts, some genuine and others not-so-genuine, tearing into the disparate domain of medical insurance in India and abroad.
While medical insurance, for those who can afford it, has become a veritable necessity in India, there are nagging doubts about whether they will meet the requirements of the hard-pressed patients when the unfortunate need arises. Like car insurance, every person who invests in medical insurance prays that this is one investment that is better if it goes unutilised. However, thousands learnt a bitter lesson when they were struck down with COVID-19 during the two deadly waves that cut a path of death across India, sparing neither the rich nor the poor.
India’s healthcare landscape has witnessed exponential growth in the past few decades. However, this rapid evolution has also led to the proliferation of medical insurance scams. For instance, a recent study highlighted that over 20 per cent of claims in certain urban centres are either fraudulent or involve significant overcharging, reflecting a troubling trend in the system. What appears as a safety net to protect individuals from exorbitant medical expenses is often fraught with deception, fraud, and systemic malpractices. From policy complexities to outright scams, the dark underbelly of the medical insurance sector affects various stakeholders, including patients, insurance companies, and hospitals, each grappling with unique challenges and consequences.
Rising Demand
Despite all the ‘horror stories’, there is no denying that everyone wants to be covered by the safety net of medical insurance, especially after the horrific experience of the pandemic when families saw their savings and assets wiped out by medical bills.
The growing prevalence of health insurance in India has fundamentally changed how medical services are accessed and delivered. While policies promise financial security during emergencies, the reality often paints a grim picture.
Two factors play an important role when policies are being purchased. First is policy complexity, which is why most people fail to understand their health insurance policies' intricate terms and exclusions. Second is the Corporate Influence or, in plain words, 'greed' of many private sector hospitals and insurance providers who form tacit partnerships, promoting unnecessary medical procedures to inflate bills.
"Health Insurance Is a Scam!"
This is a plaintive cry we see so often on social media, and it sends a shiver of fear through most of us who have put a percentage of our hard-earned income on medical insurance premiums for decades in some cases. Of course, the industry defends itself that between 2022-23, it paid 4 million claimants over Rs 23,000 Crores. Like most controversial issues, in this case, a mixed picture emerges when one digs deeper into the details; the fault lies on both sides of the aisle. One has to seek why the narrative has changed from "Insurance for people" to “Insurance vs. people".
For one, few customers bother to read the small print that forms the heart of any insurance policy, and even fewer understand what it implies. It's like insuring your household goods when moving house from one city to another, a frequent occurrence, especially if you are in the military. The local truck dealer will happily insure all your goods in five minutes. However, suppose you have run out of luck, and your truck burns to the ground or falls into a river. In that case, you realise the implications- few household goods are valid for payment if original receipts do not cover them. Some companies pay nothing for clothes, wardrobe accessories and many house hold goods as their vintage is difficult to establish. So, the poor victim not only loses his entire household goods but also receives a very small pittance from the insurance company.
The outcome – insurance documents became harder to understand, leading to customers not grasping what they were paying for. So, it was quite natural for "feeling cheated" reactions when claims came.On the other hand, insurance companies complain that they receive a mountain of undue, fraudulent claims, which would have led to beefing up the terms and conditions. Every claim is investigated in great detail, leading to delays, heartburn and, in many cases, rejection. Customers face a battle of paperwork, deductions, and even rejections. The anxiety turns into reality. And for people who don’t claim – the blow comes when premiums are regularly hiked. Most cannot understand why their premiums are hiked if they haven't claimed for years.
No doubt, fraudulent practices plague the Indian medical insurance sector, undermining trust and causing financial losses. For individuals, these scams often lead to denied claims or financial ruin during medical emergencies, while hospitals and doctors grapple with delayed reimbursements or unethical demands. On a systemic level, such practices erode public trust in healthcare institutions and inflate overall medical costs, ultimately burdening the entire ecosystem. These scams often involve insurers, policyholders, intermediaries, and healthcare providers.
Broadly, the scam can be categorised as follows: –
False Claims:
Policyholders or healthcare providers file fabricated or exaggerated claims to siphon off money from insurance companies.
Scams and Misappropriation
.
From ghost patients to inflated bills, fraudulent schemes exploit gaps in insurance policies and regulations, resulting in systemic abuse.
Internal Fraud of Medical Insurance Companies
Insurance companies are not immune to malpractice; some engage in unethical practices to bolster profits. For example, there have been cases where insurers intentionally delayed claim processing to force patients to settle for lower payouts or outright denied claims by citing ambiguous clauses buried in the fine print of policy documents.
Some key areas are as follows.
Bogus Marketing.
Aggressive marketing tactics exaggerate policy benefits while downplaying limitations hidden in the fine print, leading to a significant gap between customer expectations and actual coverage.
Underpayment
.
Insurers frequently underpay claimants, hospitals, or physicians, citing technicalities or insufficient documentation.
Denial or Cancellation
.
A prevalent issue involves denying legitimate claims or cancelling policies after claims are filed, leaving policyholders stranded during emergencies.
Assert Diversion
.
Mergers and acquisitions between insurance companies often result in the loss of previously promised premiums or benefits, leaving policyholders with limited or no compensation.
Kickbacks and Incentives
.
To curb legitimate claims, some insurance agents are incentivised to downplay or deny valid claims, further harming policyholders.
Ganging
.
Certain companies exploit insurance by billing for friends, relatives, or helpers accompanying a patient, even though these individuals did not receive any treatment.
Intermediary Fraud
Policyholders and intermediaries also contribute to the fraud ecosystem, exploiting insurance loopholes for personal gain.
Non-Disclosure
.
Many individuals misrepresent their health conditions, age, or pre-existing illnesses to secure coverage, only to face complications during claim processing.
Doctor Shopping
.
Patients visit multiple doctors under the same policy to procure prescriptions for controlled or narcotic substances, often leading to abuse and fraud.
Diversion
.
Prescription medications obtained through insurance are resold to third parties at a premium, creating a black market for drugs.
Premature Claims
.
Policyholders file claims during the waiting period, often manipulating documents to bypass the stipulated latency.
Murder for Medical Insurance
.
Tragic and shocking, some fraudsters insure newborns or elderly individuals and orchestrate their deaths to claim insurance money.
Orchestrated Accidents
.
Fake accidents are staged to claim substantial sums, often involving collusion between claimants and medical establishments.
Fake Mortality
.
Fraudsters use unclaimed bodies to fake deaths, enabling illegitimate claims against policies.
Premium Diversion
.
Insurance agents collect customer premiums but embezzle the funds without enrolling in the policy.
Culpability of Hospitals and Medical Establishments
Hospitals are often complicit in insurance fraud, exploiting loopholes to maximise revenue. For instance, some hospitals may recommend unnecessary diagnostic tests or treatments to inflate bills, capitalising on insurance policies that cover such procedures. This behaviour is often driven by the pressure to meet revenue targets or repay heavy infrastructure and technology investments, leading to unethical practices.
Hospital Overbilling/Overcharging
.
Conducting unnecessary tests
, e
xtending patient stays beyond necessity
, u
pgrading room categories without consent
,
and m
isleading patients with technical jargon in inflated bills.
Fake or Forged Documentation
.
Manipulated records, duplicate bills, and fabricated reports for non-existent procedures (phantom billing) are common.
False Claims
.
Recommending higher-cost treatments (upcoding)
, c
laiming for unperformed procedures or therapies
,
and f
iling multiple bills for the same condition (unbundling).
Fabricated Illnesses
.
Hospitals falsely diagnose illnesses or defects to justify unnecessary treatments, surgeries, or prolonged stays.
Fraud Ring Network
.
Collusion among hospitals, doctors, and patients creates organised networks that exploit insurance policies for financial gain.
Reforming the System
Transparency in Policies. Insurance companies must ensure that their terms and conditions are clear and accessible to policyholders. Fine print clauses should be simplified and communicated effectively.
Stricter Regulation. Establish regulatory authorities to monitor insurance practices and penalise offenders.Enforce audits of insurance claims and hospital billing practices.
Technological Integration. Using blockchain and AI for claim verification can help reduce fraudulent activities by maintaining immutable records.
Public Awareness. Educating consumers about their rights, insurance processes, and common fraud schemes can empower them to make informed decisions.
Accountability for Hospitals. Mandatory audits and stricter oversight can deter hospitals from engaging in unethical practices.
Key Takeaways
While a crucial safeguard, the medical insurance system in India is plagued by scams and fraud that undermine its core purpose. Tackling these issues requires a concerted effort from regulators, insurance companies, healthcare providers, and policyholders.
Only through systemic transparency, accountability, and awareness can the Indian medical insurance ecosystem evolve into a reliable and equitable safety net for all.
Are you insured? If so, it is time to critically evaluate your policy, understand its nuances, and stay vigilant against the many pitfalls that lurk within the system.
